The export-oriented German industry is feeling the effects of the weakness in the global economy. The export figures are still above the previous year’s values, but the prospects are clouding over.
After a weak start to the second half of the year, Germany’s exporters are preparing for difficult months. “The high-risk global economic environment is poison for any long-term investment decision. This situation is made more difficult by the ongoing supply bottlenecks and delivery delays,” commented the President of the Federal Association of Wholesale, Foreign Trade, Services (BGA), Dirk Jandura, on Friday.
From June to July of the current year, German exports fell by 2.1 percent, as reported by the Federal Statistical Office. The demand for goods “Made in Germany” from important sales markets such as the USA and China fell, and trade with Russia almost came to a standstill.
High energy prices, problems in the supply chains and an overall weak global economic environment are weighing on the outlook. A majority of sectors expect exports to fall in the next few months, according to the latest survey by the Munich Ifo Institute of around 2,300 industrial companies.
“Retail is no longer a growth engine, but has developed into a stumbling block for German growth,” analyzed Carsten Brzeski, chief economist at ING Germany. VP Bank chief economist Thomas Gitzel is also convinced that the negative sign in the export figures will appear more frequently in the coming months: “The export figures are to a certain extent a harbinger of a noticeable weakening of the global economy.”
After all: Compared to the previous year, which was shaped by the pandemic, the July balance sheet is more conciliatory. According to calculations by the Federal Office, there was an export increase of 14.3 percent in July 2021.
According to the Wiesbaden statisticians, Germany shipped goods worth 131.3 billion euros abroad in July. From January up to and including July 2022, German exports totaled 886.9 billion euros. Despite the economic turmoil resulting from the war in Ukraine, this is an increase of 13.4 percent compared to the same period last year.
“The increase in value of exports compared to the previous year is mainly due to the higher energy prices,” explained the Federation of German Industries (BDI). “The development of exports is cause for serious concern.” According to the assessment of the German Chamber of Industry and Commerce (DIHK), a downward trend in foreign trade is unmistakable. “It is particularly striking that even the demand from our most important export market, the USA, is now decreasing,” commented DIHK foreign trade chief Volker Treier. In July, exports to the USA fell by 13.7 percent to 12.3 billion euros compared to the previous month.
Trade with Russia almost came to a standstill as a result of sanctions against the country. From June to July, German exports to the Russian Federation fell by 15.1 percent to a nominal 1.0 billion euros. Imports from Russia to Germany fell by over 17 percent to 2.9 billion euros – partly because less natural gas flowed from Russia to Germany.
Overall, Germany imported goods worth 125.9 billion euros in July. That was 1.5 percent less than in June 2022, but 29.3 percent more than a year earlier. Germany is dependent on energy imports from abroad. Oil and gas prices have risen significantly since the beginning of the Ukraine war.